Sun Sentinel Broward Edition
No break for us on insurance
Citizens wants to cut rates in Florida, but not here.
Only a quarter of South Florida residents insured by Citizens Property Insurance Co. will see rate decreases in 2016 compared with nearly two-thirds of policyholders everywhere else in the state if requested rates are approved by state insurance regulators and the state-owned carrier’s Board of Governors.
Broward, Palm Beach, Dade and Monroe counties are among 20 Florida counties where average rates for personal lines policies will not decrease, and are the only four Florida counties where Citizens wants to increase rates for multi-peril single-family homeowner coverage.
Decreases in rates for personal lines coverage are projected for just 24 percent of 287,996 Citizens policyholders in the four South Florida counties. Among policyholders in the other 63 counties, 66 percent should see rate decreases, according to information released Monday by Citizens.
The four South Florida counties comprise 43 percent of Citizens’ total 573,221 personal lines policies.
Citizens cited three major factors for a requested 3.2 percent overall rate increase in Florida: the need to correct “the historical inadequacy” of rates charged to coastal residents who face greater exposure to the effects of hurricanes, a “continued spike in water loss claims” in southeast Florida and the fact that private insurers have taken over coverage of coastal policies with “nearly adequate rates,” or rates that more accurately reflect risks of insuring their properties.
The state’s depopulation program, which encourages private insurers to offer policies to Citizens policy holders, shrank the size of
Citizens by nearly 550,000 since January 2014.
Rates for wind-only policies, purchased by coastal homeowners most vulnerable to hurricane-force winds, will increase by an average 8.8 percent statewide.
Lynne McChristian, Florida spokeswoman for the Insurance Information Institute, an industry organization, said the increases likely reflect Citizens’ efforts to “actually get rates that reflect the risk” of insuring their remaining base of policyholders after years of being forced to set rates so that policyholders could afford them.
“The closer Citizens gets to charging a premium that reflects the risk, the better off Citizens will be and able to pay claims in the future,” she said.
Jay Neal, president of the Fort Lauderdale-based Florida Association for Insurance Reform, said late Monday that he hadn’t seen a breakdown of the proposed rates yet. But an overall personal lines rate increase of 3.2 percent “is painful but certainly better than anything we’ve had in the past except for the aberration of last year” when the overall rate decreased 2.7 percent statewide.
Average rates in Broward, with 85,160 personal lines policies, would increase 4.8 percent and the average premium would increase from $1,751 to $1,835. Rates would decrease for 25 percent of policyholders. Multi-peril rates for 22,242 single-family homeowners would increase 2.9 percent, and the average premium would increase from $2,611 to $2,688.
In Palm Beach County, with 57,926 personal lines policies, average rates would increase 4.6 percent and the average premium from $1,740 to $1,819. Rates would decrease for 36 percent of policyholders. Multi-peril rates would increase by 0.7 percent, and the average premium would increase from $2,419 to $2,437.
In Miami-Dade County, where Citizens insures 124,738 with personal lines policies, average rates would increase 6.2 percent and the average premium would increase $2,383 to $2,529. Twenty percent would see lower rates.
And in Monroe County, with 20,172 personal lines policies, average rates would increase 10.3 percent and the average premium would increase from $2,992 to $3,299.
Three percent would see lower rates.
Statewide, personal lines rates would increase 3.2 percent and the average premium would increase from $1,662 to $1,716.
Meanwhile, most singlefamily-home policyholders who don’t live near the coast would see rates decrease in 2016 by an average 1 percent, while inland mobile homeowners would see a 7.4 rate reduction.
The proposed increases come weeks after the company declared itself financially able to pay claims resulting from a 1-in-100 year storm event because of $7.5 billion in reserves built up through nine hurricanefree seasons and the low cost of reinsurance in the global marketplace.
Citizens is required by law to recommend rates that are actuarially sound while complying with a 10 percent limit on rate increases, the company said.
In addition, the requested rate increases likely take into account increases in reconstruction costs as the economy recovered over the past few years, McChristian said.
During the past three years, insurers and their supporters in the state Legislature have been warning that shady water-damagerestoration contractors and their attorneys have been collecting millions of dollars in bogus claims and threatening to drive up homeowner insurance rates in Florida.
Citizens’ Board of Governors will consider the requested rate increases on Wednesday. Citizens will submit its requests to the Office of Insurance Regulation in July.